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Suppose the own price elasticity of demand for the products of an in the Rothschild Index is 0.15. What happens to the demand
Where Qy is the quantity demanded that this market is facing, and Pr> price. Suppose the elasticity of demand for one of the
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Answer #1

Market demand is QT = 150 - 6PT

Own price elasticity of demand for the market = slope x P/Q

= -6 x 12 / (150 - 6*12)

= -0.92308

Now Rothschild index = Own price elasticity of demand for the market / Own price elasticity of demand for a single firm

= -0.92308 / -4.66

= 0.198 or approximately 0.20.

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